CAK WON'T ISSUE LTE LICENSES UNTIL AFTER 2015

After issuing Safaricom a Long Term Evolution (LTE) license to roll out 4G services, Kenya's industry regulator Communication Communication of Kenya has ruled out issuing new LTE licenses until after June 2015.

With digital migration and freeing up of analogue TV frequencies, it is expected that these will be available for LTE.

But CAK Director General Francis Wangusi, now says until after the World Radiocommunication Conference which will determine the optimal allocation of these frequencies no new licenses will be issued.

The WRC to be held in November 2015.

According to Wangusi, the meeting will determine whether to issue 2x45 MHz or 2x20Mhz licenses.

If it issues 2x45MHz, it will only be able to license two players, in addition to the Safaricom license, Wangusi said.

For 2x20Mhz, CAK will be able to issue licenses to about 6 players.

However, devices on the 2x45Mhz end up being cheaper than on the alternative.

Safaricom has said it expects to see a sub-$100 LTE smartphone in the Kenyan market by February 2015.

DIGITAL MIGRATION: BAMBA TV RADIO AFRICA'S 50-CHANNEL FREE TO VIEW SH3,300 OFFER

Radio Africa Group, associated with CEO Patrick Quarcoo has made a bold entry into the digital terrestrial TV field with a free to view box selling for Sh3,300 but no monthly subscription fees.

Bamba TV set top box will carry 50 channels half of them international and the rest local free to air channels like local broadcasters.

A review of the content for this product will be forthcoming soon.

Bamba TV will replace the company's KISS TV and also offer more channels under its digital and bamba division.

With 50 free to view channels, Bamba will seek to make money off advertisements on the different channels.

Danny Mucira is the GM for the data and bamba division. He previously worked as the GM Multichoice Kenya and has previously worked with Old Mutual and Shell Kenya.

The digital division is ran by Lancia Digital a DTT company owned by Radio Africa Group.

Times Media of SA earlier in the year bought a 49 per cent stake in RAG for $18m and promised to help in the roll out of the DTT offering.

Valued at Sh3billion plus, this is RAG's latest bet as the country migrates from analogue to digital TV transmission.

Times Media, Patrick Quarcoo and William Pike are the main shareholders of RAG. Smaller shareholders sold off significant part of their shareholding in the transaction with the SA group.

These included Sirwo enterprises of William Chesire and Kiprono Kittony, Sudhil Vidyardhi, Longhorn Enterprises, Xynergy, Kitambo Limited etc.

Digital Migration Must Not Be Delayed Any Longer

The real analogue-to-digital switch over is set to take place in Nairobi at the end of this month. Broadcast transmission will shift to digital signals.

It is a transition that is expected to have a significant impact on the way we receive information, as anyone in Nairobi without a digital set-top box will not access television channels.

This process is coming more than a year later after court cases kept delaying the move from the initial date of June 2013. Digital migration must not be delayed further.

Some litigants, notably the owners of some of the big TV stations in the country, have threatened to go to court again, or to pull their signals off air, rather than transmit them on the two digital distribution platforms licensed earlier: state-owned Signet [through the Kenya Broadcasting Corporation] and Pan African Network Group, a Chinese firm. The TV owners have been granted a licence to distribute signals as well.

It is easy to see why they have kept delaying this process.

For starters, they have enjoyed an almost cartel-like environment for broadcasting and have had the muscle to roll out coverage across the country. For this, they have been charging high advertising rates, while stating audience numbers that few advertisers can ascertain.

It has also helped that analogue TV frequencies have been limited, so the threat of competition has been minimal.

With digital migration this landscape shifts dramatically. To begin with, the migration separates signal distributors from content providers.

Secondly, each analogue frequency yields about 18 digital frequencies, dramatically opening the field and lowering the entry bar for competition.

Third, digital platforms mean advertisers can better track the actual number of viewers on each channel, hence make more reliable investments in media buying.

That this process has taken this long to implement is testament to the business-unfriendly environment brought about by litigant-friendly courts in the country. While it is understandable that broadcast TV station owners needed a bit of time to assess the changing business environment, it is criminal to hold development hostage for that long in their interests.

The country has lost a lot by delaying the migration process, particularly in terms of new investments, denying young creative minds outlets for their content, and digital dividends that we expect to result from frequencies that are freed up after the switch-off.

These are frequencies that can be used to increase mobile technology and penetration to remote areas, boost internet access and so on.

Further, there are investors who actually sunk in money with business projections pegged on the original deadlines set by the regulator, but have now had to revise these because of endless delays in the process.

Multichoice Kenya and StarTimes Media not only spent money acquiring expensive content, but also in importing affordable digital set-top boxes and millions of shillings more in marketing and activating these products.

Multichoice has, for example, invested heavily in Africa Magic channels, developing content tailored to the local market and making use of local talent. However, until migration is effected, the larger pool of audience it had in mind will not materialise.

Lastly, with new technology, you never know what innovations will come up and, maybe, we have denied a lot of talent take off.

Shows like Churchill Live give a platform to new and upcoming comedians. Who knows, with more channels available, the show could be the basis of our own Comedy Channel featuring all these artists in full version instead of cramming them in a 45-minute slot.

Another reason that the migration should not be delayed further is that TV owners took part in the original bidding for a signal distribution licence. According to the Communications Authority officials, the bid they put in was shoddy and they lost.

Should projects be delayed because a losing bidder demands that they must be part of it even when they show lack of technical capacity?

They have now been granted a licence. However, how long will it be before they roll out services? First, they need to bring in the technical expertise. Then, they need billions of shillings to roll out national infrastructure like Multichoice and Startimes have done.

They will also need to buy competitive content to get people on their platforms. How long will this take and should we wait for them to get their network running before Kenyans can be allowed to migrate?

What TV stations should concentrate on is getting the right content. Investing in this, rather than seeking to control infrastructure, is inherently more central to their core business and will likely bear them higher profits.

TV stations in the US such as CBS, Fox, ABC and NBC make their bread and butter from commissioning cutting edge TV shows which Kenyans buy off the streets as ‘movie series’ or in broadcasting rights for popular sports like NFL, NBA and so on. Others like

Showtime and HBO are pay-channels, which carry exclusive material and have no adverts.
Whichever model our TV stations choose, they should do so as we migrate on December 31, not delay the switch-off.

- See more at: http://www.the-star.co.ke/news/digital-migration-must-not-be-delayed-any-longer#sthash.vxzaUZp1.dpuf

[This article first ran in The Star. http://www.the-star.co.ke/sections/james-mbugua]

DIGITAL MIGRATION: IS KENYA'S ICT MINISTER MATIANG'I LOBBYING FOR BROADCASTERS?

Fred Matiang'i, the Cabinet Secretary for ICT, sat on the government table during the launch of the consumer education campaign for TV digital migration being carried out by the Communications Authority of Kenya.

But he might as well have been sitting on the "stakeholders" table where media owners' interests sat.

Giving the keynote speech while observing the challenges that have faced the migration process which was meant to take place exactly one year ago, the CS attacked the regulator for being insensitive to the needs of stakeholders.

He said everyone's interests must be looked at in future when making policy to avoid confrontations and emphasized that we must support the local broadcasting industry.

From Rose Kimotho to Faridah Karoney and all the other media interests in the room, this must have sounded like music.

After all, aren't these the same media interests that held up the process of migration by rushing to court last year when Justice David Majanja ruled to halt the process?

The CS is right that the interests of stakeholders should be looked into but exactly which stakeholders?

Sitting on their own, was a group of men led by a bespectacled elderly fellow who it turned out are the "jua kali" sector....the independent set top box vendors. These guys import their own set top boxes which are free to air.

They have been burnt seriously with all the back and forth of court cases, reversal of decisions by government when they had already sunk money into production of boxes only for the government to say it had decided to use a different format and so on.

Between them, one fellow confided, they had spent about Sh200million and a lot of it was unrecoverable.

But despite their pleas to be given some consideration after such losses the CS offered little beyond saying those selling uncertified boxes would be arrested.

The other investors are the content providers such as Multichoice and Startimes. They also have spent millions preparing for launch, acquiring content and so on and had factored in a whole year of recruiting subscribers but were caught up in the delays occasioned by the case.

The CS did not mention them,

In the meantime, the media owners did not lose a cent in revenues as the case dragged on, but continued to mint their advertising dollars on analogue signals.

To aggravate matters further, while holding the rest of the country hostage, they have been accused of refusing to carry consumer education information on the digital migration, an issue that should have been raised during the court case to demonstrate their lack of good faith.

So it was quite surprising to hear the CS talk literally like the media owners are the ones who had been wronged when they have cost so many investors a lot of money.

KENGEN SLOTS IN OL-KARIA GEOTHERMAL PHASES V, VI AND VII

 Kengen, the power generator, is on a roll and in a fix at the same time. This coming Friday, it has invited President Uhuru Kenyatta to commission the 140Mw power station it has done at Ol Karia IV. MD Albert Mugo says that as a result of the injection of the geothermal power into the national grid, the fuel cost charge on consumer electricity bills has fallen from Sh7.22 per Kilowatt Hour (Kwh) in July/August to 5.39/Kwh in September and 4.79/Kwh in October. With another 140Mw in Ol Karia I phase II coming online, this charge is expected to go down to about Sh3/Kwh. That will certainly be a relief.

Better yet, the wells drilled by Kengen in Ol Karia that were expected to yield 5 Megawatts equivalent ended up doing double that, around 13Mwe. One world record breaking well is doing 30Mwe.

What this means is that to generate the 280Mw this total project was meant to do, Kengen ended up doing fewer wells than initially projected. Keep in mind, some of these wells cost US$6million (Sh534million) to drill.

So instead of the US$1.2billion (Sh106billion) it would have spent, it ended up doing about $960 (Sh85.5billion) including drilling.

The decision has been made to use the savings and the generous steam, to do an additional 70Mw plant to bring the total to 350Mw (by far Africa's largest geothermal power plant).

Financiers are happy. Take JICA (Japanese International cooperation Agency). They funded Ol Karia I Phase II. The project has gone so well, they have come to Kengen wanting to fund Ol Karia V. Those talks are ongoing.

But therein also lies Kengen's dilemma. The company is highly leveraged.

Its current funding structure is approaching 70% debt and 30% shareholders contribution (equity).

It cannot accept JICA's money, as soft as the terms are, without increasing its shareholder's equity.

This is why Kengen is doing a rights issue. As the company is 30% owned by the government, it is waiting to get word back from Treasury as to whether they will take up their rights. It is expected they will. Since the rights issue is for Sh15billion, government will be expected to come up with Sh10.5billion and shareholders Sh4.5bn.

Institutional investors should be easy to bring on board.

Kengen's geothermal power plants have an Internal Rate of Return of about 12.5%, according to Mugo, the MD. This means they will repay the investment in 8 years or thereabouts.

Which is why it will develop Ol Karia 6 and 7 using a Public-Private Partnership (PPP) model.

Already two firms have approached it expressing interest.

The RFPs (Request for Proposals) for a transaction advisor will be opened tomorrow (Wednesday 15, October 2014).

The company will seek a partner with whom to set up a joint-venture using a Special Purpose Vehicle. The partner should be able to source for equity as well as the debt required to finance the project.

One key takeaway is the amount of experience Kengen has gained from handling such a project with so many different players and contracts to implement.

The power plants have been built by Hyundai Heavy Industries, the South Korean conglomerate.

The Turbines were supplied by Toshiba of Japan.

The substation and transmission lines were done by KEC International of India.

Sinopec of China did the steamfield development.

Development of the steamfield was financed by World Bank and KfW of Germany.

The consultant for the design of the project and supervision of implementation was SKM of New Zealand.

Financing of actual construction was by KfW.

Financing of the power plant was by European Investment Bank (EIB)and French Agency for Development (AfD) - not to be confused with its more commercial arm, Proparco which finances projects on more commercial terms.

The substation and transmission line were financed by EIB.

ZUKU REVEALS PAN AFRICAN AMBITIONS

Pay-TV Zuku is emerging as the darling of Private Equity companies who have pumped in Sh11.6billion (US$130million) for its expansion across the continent.
Holding group Wananchi which owns Zuku said it raised the money from leading international cable companies, Altice and Liberty Global as well as PE firms ECP (Emerging Capital Partners) and Helios.
Zuku is targeting high-density population areas with its fast growing triple play service with emerging urban centres like Kitengela in its sights.
It also seeks to expand in the region including Ethiopia and in West Africa.
The firm has become a major player in the fixed line business providing telephony and internet services as well as pay TV.
Communications Authority (CA) places Zuku first in fixed internet at 44.7%. Liquid Telecom (formely KDN) 17.8%, Telkom Kenya (11.6%), AccessKenya (11.5%) and Safaricom 7.1% follow.
The triple play service has proved popular where it is available although this is restricted to certain areas as the company seeks to expand coverage.
The convenience of getting cable TV but also internet service has seen the company grow to 200,000 subscribers by its own statement, in the region.
The company's TV bouquets carry all the local channels, documentary channels like NatGeo Gold, Discovery Science and Europe based Viasta Explore and Viasat Crime. It also has 5 sports channels including Zuku live sports, Zuku sports, two Fox sports channels (for those who watch the NFL) and a Eurosport channel.
A ruling earlier this year is supposed to see rival Dstv that holds exclusive rights to English Premier League ganes share these lucrative rights with the likes of Zuku and Star Times.
The new round of fundraising is an endorsement about the upside potential of the business given the shareholders are all experienced players in the TMT (Technology, Media and Telecommunications) space or in the African private equity space.
Liberty Global for example is the largest international cable company in the world. Altice SA is a multinational cable company present in France, Belgium, Israel, Luxembourg, Portugal, Switzerland and the French West Indies.
Helios Capital, an African focused PE fund has made some shrewd investments in Kenya most notably in Equity Bank where it holds 24.45% of the bank valued at Sh50billion. It's initial investment was Sh11billion in 2007.
It is injecting $40million (Sh3.6bn) into Wananchi Group as part of the Sh11.6bn the company has raised to fund the expansion of its cable footprint.

KETRACO'S TRANSMISSION EMPIRE.....

The left most row of pylons with power cables, is called the Nairobi North line. It carries power from Ol Karia geothermal fields up the escarpment through Ndenderu to Nairobi.

The centre row of pylons, is new. It is also supposed to bring power from new steam plants in Ol Karia IV and Ol Karia 1 phase II, a total of about 350Megawatts of power.

The row of pylons on the right, is the Loiyangalani line. It is supposed to bring power from the Lake Turkana Wind Power project, 430kilometres and deposit it at Suswa for onward redistribution.

The road shown is the Maai-Mahiu to Narok highway, the exact spot is at Suswa where the lines cross the road and onward to a massive substation coming up at Suswa.

Joining them will be another set of high-voltage carrying pylons this time coming from 1100Km away in Ethiopia where Kenya is purchasing 400Mw of power for itself and also wheeling in, 400Mw each for Tanzania and Rwanda.

From here they will drop at the Suswa substation currently under construction.

This will be one of the most crucial infrastructure installations in the country.

Shown here is just the 220Kv substation for receiving the current power that is coming from Ol Karia, as well as Loiyangalani.

Next to it, will be built a much bigger HVDC (high-voltage Direct Current) converter substation to bring in as much as 2000Mw from Ethiopia.


All this is just a small representation of Ketraco's (Kenya Electricity Transmission Company) ambitions to build an aerial empire.

It starts from modest beginnings.

The Nairobi North line shown above for instance is currently one of the most if not the most important power line in the country.

It goes down, we get almost national blackouts.

This represents the serious lack of investment in transmission lines in the country over the last 30 years.

Before the current network of pylons Ketraco is putting up, the Nairobi North line and the Turkwell line were the only transmission projects the country had invest in during that time.

The company has already doubled the length of transmission lines in the country and plans to have 10,000Km of lines by 2020.

Check the list below if the lines go through your village.

The Nairobi North line became crucial because it provided an alternative source of power from Ol Karia to the Seven Forks.

But all those power stations produce about 60Mw each from Masinga, to Kaburu, Kindaruma, Kambere and Gitaru.

For the reason that these stations are in Eastern Kenya, the Dandora substation in Nairobi where they bring their power has been the most important in the country.

Suswa is going to rival that.

The plants coming up at Ol Karia are at least 70Mw each and with Kengen putting up 5 of them, we are looking at 350Mw from the phase one project alone.

Phase II is meant to do 560Mw.

Geothermal Development Company meantime is doing about 400Mw and 800Mw at Menengai in phases I and II.

From the Suswa substation, power will be transmitted eastwards to Nairobi through the Nairobi North line but also through the Suswa-Isinya line.

At Isinya, another substation to receive this power and also from the high-voltage line from Mombasa is being put up.

Power from here will be sent eastwards to Athi River and Embakasi substation for distribution.

It will also head south to Tanzania where it will link up with the ZTK project (Zambia-Tanzania-Kenya) transmission project.

On the long neglected eastern side of Kenya, Lamu to Kitui is likely to see some of the biggest transmission works in the future.

The 900Mw coal power project at Lamu awarded to the Centum/Gulf Energy consortium will be linked through Kitui and into Nairobi East with another line extending to Wajir and beyond.

This project should be done in the next two years if the Centum/Gulf group under their AMU group deal with the petition by losing bidder HGIC.

At the same time, these substations at Suswa, Isinya, Embakasi, Dandora and so on form a ring around Nairobi that is supposed to stabilize the power supply in the commercial capital of Kenya.

Nairobitech will update as each of these projects come online.

Some notable projects completed or in progress include.

1. Sondu - Kisumu line 50Km COMPLETE
2. Rabai - Galu line 48Km COMPLETE
3. Chemosit - Kisii line 62Km COMPLETE
4. Kamburu - Meru lin 122Km COMPLETE
5. Sangoro - Sondu line 5Km COMPLETE
6. Mumias - Rangala line 34Km COMPLETE
7. Mombasa - Nairobi line 482Km ONGOING
8. Rabai - Malindi - Garsen - Lamu ONGOING
9. ............................